1. #1
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    Default Tell the vendor how much we have to spend for new Grant apparatus?

    If awarded for our new AFG engine I wonder why we shouldnt tell the vendors what we have to spend, (it's public knowledge anyway), and see who can provide the most apparatus for that money? Most of the techie stuff can be met using many different substitutions, ie, we dont care what brand tires, who makes the axles or who makes the seats. Aside from giving them our basic needs/specs, (max length/height, pump, tank, hose bed needs, etc), do you think the manufacturers would provide 'extras' to value up the vehicle in an effort to provide the most bang for the buck and win the bid?
    I have a thread about this in the apparatus forum, but wondered if any other vehicle grant awardees took this approach, or everyone simply listed their specs and vendors best value wins?

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    Quote Originally Posted by hinesfire View Post
    If awarded for our new AFG engine I wonder why we shouldnt tell the vendors what we have to spend, (it's public knowledge anyway), and see who can provide the most apparatus for that money? Most of the techie stuff can be met using many different substitutions, ie, we dont care what brand tires, who makes the axles or who makes the seats. Aside from giving them our basic needs/specs, (max length/height, pump, tank, hose bed needs, etc), do you think the manufacturers would provide 'extras' to value up the vehicle in an effort to provide the most bang for the buck and win the bid?
    I have a thread about this in the apparatus forum, but wondered if any other vehicle grant awardees took this approach, or everyone simply listed their specs and vendors best value wins?
    Any vendor worth their salt will know how much you have to spend as the AFG awards are public record.

    For our brush truck in 2005 we developed our specs to meet our needs and requirements. The Town's bidding process was followed with 7 manufacturerers recieving packets. In the end, the lowest bidder met all of our requirements and came in under budget (all bids came in under budget).

    I think you need to develope your specs to what you need and require and go from there. Remember "extra" value only seems that way; you will still be paying for it in the end.

    For ex. All the bidders meet your specs and are close in $$$$, but one rep provides a pre-piped master stream for that extra value. Closer examination shows they used a different engine, tires, transmission (not superior products cost less, but meets the bid) compared to the others. In the end that percieved "extra" value is traded off for the other less costly components.

    Compare apples to apples to determine that an "extra" value truely is that and not something else.
    Last edited by onebugle; 01-05-2011 at 02:58 PM.

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    I received the award packet from my reginal rep for a new engine about two days ago, in it was the following concerning "zero down payment"

    The following should be taken into consideration when negotiating a penalty clause.

    1) Include a “Zero-dollars-down” policy. This means that neither the grantee’s nor the Federal government’s funds will be used to pay any money to the manufacturer until the vehicle is delivered (100% payment upon delivery). The manufacturer will carry 100% of the risk until delivery. No copy of the contract is required in this scenario unless the grantee exceeds the period of performance

    Has anybody had any problems doing this? I fully understand why they would like this.

    By including this in our request for bids, would it right to state something like " Due to using federal funds to purchase this engine, we are required to have a zero-dollars-down claus in this contract"

    Any ideas or suggestions?

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    This must be new. Previously you were allowed to request 25% of your awarded funds as a pre-payment, but your also required to get a bid bond which puts the manufacturer on the hook for finishing the vehicle and delivery, within the time constrints of your bid.

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    Quote Originally Posted by chief14oc View Post
    This must be new. Previously you were allowed to request 25% of your awarded funds as a pre-payment, but your also required to get a bid bond which puts the manufacturer on the hook for finishing the vehicle and delivery, within the time constrints of your bid.
    I am talking with Rands right now. This surprised me too. He is going to contact his DHS rep tomorrow to get a clarification and relay to response to us all.

    As a former large boat dealer, many manufacturers required a $10,000 deposit with the order and another $10,000 when the boat when to molding.

    There are other ways to look at this. A commitment for a commitment. Why is the government expecting the manufacturers to bear the entire expense without a commitment from the buyer.

    I guess the cash match will have to be the new down payment requirements.
    Last edited by jam24u; 01-05-2011 at 04:22 PM.

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    AS I read it now, FEMA is even saying that the awardees cannot use their cash match as the down payment either. Wow!

    Here is how it reads......

    ***The following should be taken into consideration when negotiating a penalty clause.

    1) Include a “Zero-dollars-down” policy. This means that neither the grantee’s nor the Federal government’s funds will be used to pay any money to the manufacturer until the vehicle is delivered (100% payment upon delivery). The manufacturer will carry 100% of the risk until delivery. No copy of the contract is required in this scenario unless the grantee exceeds the period of performance.


    Where is the commitment for commitment in this type of business relationship?

    Frankly, I do not care how many manufacturers have failed to meet deadlines or delivery dates. To me this is a perfect example why the present government doesn't understand a capitalistic economy. Every industry they have taken over has been a miserable performer and it looks like it isn't going to improve. What if a facility say in Nashville was hit by the flood or an area hit by a hurricane? "Well that's a different subject for now."

    There has to be a spirit of cooperation and understanding within business. Very often, problems or delays work out successfully and those that don't are not around long enough to continue to take unfair advantage. Word in business spreads pretty fast too.

    The way the above guidance relates their preference, it gives the impression they (the government) doesn't trust anybody. (Probably their own fault)

    Didn't the IRS just have a forms glitch or something that would affect certain filers? They will not be able to submit their returns for a period. (I'm not referring to the April 15th deadline, but something else.)

    Somethings going on here and it makes me wonder how it is spreading into other areas of government funding.


    Rands is going to let us know what the thinking is on this later on. I would be interested to know if everyones vehicle award reads like this.

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    Zero-down is not unusual, but appears to be new to the AFG. The apparatus that we have purchased over the last 20+ years have been 100% payment on delivery and acceptance of the vehicle. No pre-payments. The only thing I could see in our bid package stated that there had to be an explanation on why a pre-payment was needed.

    I think you will find that the smaller companies vs. the large companies will require a pre-payment as they typically don't have the financial backing to wait until delivery.

    Makes sense that the AFG is doing it....forces the completion of the vehicle.

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    Quote Originally Posted by onebugle View Post
    Zero-down is not unusual, but appears to be new to the AFG. The apparatus that we have purchased over the last 20+ years have been 100% payment on delivery and acceptance of the vehicle. No pre-payments. The only thing I could see in our bid package stated that there had to be an explanation on why a pre-payment was needed.

    I think you will find that the smaller companies vs. the large companies will require a pre-payment as they typically don't have the financial backing to wait until delivery.

    Makes sense that the AFG is doing it....forces the completion of the vehicle.
    Burp!

    I just ate that one Andy!

    (still dont like it though)

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    Quote Originally Posted by jam24u View Post
    Here is how it reads......

    ***The following should be taken into consideration when negotiating a penalty clause.

    1) Include a “Zero-dollars-down” policy. This means that neither the grantee’s nor the Federal government’s funds will be used to pay any money to the manufacturer until the vehicle is delivered (100% payment upon delivery). The manufacturer will carry 100% of the risk until delivery. No copy of the contract is required in this scenario unless the grantee exceeds the period of performance.
    I have not seen a copy of an award package with this language in it yet nor have I spoken with anybody from DHS on this topic.

    However, from what was presented above, it appears that DHS has suggested another option for negotiating a penalty clause. The statements "The following should be taken into consideration" and "No copy of the contract is required in this scenario" is suggestive of guidance as opposed to regulation.

    Does the award letter specifically state that pre-payments are no longer allowable even with a performance bond?

    I'm curious to hear what Rands learns from DHS.

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    In our last three purchases of trucks, we were offered the option of prepaying the chassis cost in order to receive a discount. We determined the discount was not substantial enough to have us tie up funds and we pay for trucks in full on delivery and acceptance.
    Makes the manufacturer and sales rep keep the faith in producing exactly what the customer ordered & delivery on time.

    My guess is the AFG has had too many trucks go beyond the POP and is doing this as a means of keeping builders on schedule. They know when a truck on the line is funded by AFG and keep the process moving on schedule.

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    On the original topic--i'd not tell them. A--As others have said, it's easy enough to find out what the federal share is. B--knowing the federal share does not indicate whether the dept has a willingness or ability to exceed the required match to get more truck. C--telling the salesperson that my budget is $xxx,xxx increases the risk that the pencils will not be as sharp as they could be. Excess funds can be used to further the project, provide training and FPS stuff--i want some excess if we can get it.

    On the "zero-down" issue--our Township Attorney has long favored that policy for his clients anyway, regardless of the funding source. Oddly, some of the "big" companies have not been as flexible with that, nor have they been as willing to provide a performance bond. A few that we tried to work with had enough multi-vehicle contracts that they had an attitude of not needing to change their standard practice--take it or leave it. Zero down and or the ability/willingness to secure a performance bond speak volumes about financial stability.

    Finally--be careful with bonding terms. When contracting with a down payment you want a Performance Bond. Bid bond won't help get your funds back. A builder who can get a performance bond will not likely have a problem performing!!

    earl

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    Quote Originally Posted by islandfire03 View Post
    In our last three purchases of trucks, we were offered the option of prepaying the chassis cost in order to receive a discount. We determined the discount was not substantial enough to have us tie up funds and we pay for trucks in full on delivery and acceptance.
    We actually did this on our pumper/tanker. When the chassis was delivered (commercial chassis) it was titled directly to us. Once the paperwork arrived, we sent payment. If nothing else, if something happened we had a chassis we could go pick up.

    On our quick attack we paid 100% on delivery.

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    Quote Originally Posted by davepa View Post
    I have not seen a copy of an award package with this language in it yet nor have I spoken with anybody from DHS on this topic.

    However, from what was presented above, it appears that DHS has suggested another option for negotiating a penalty clause. The statements "The following should be taken into consideration" and "No copy of the contract is required in this scenario" is suggestive of guidance as opposed to regulation.

    Does the award letter specifically state that pre-payments are no longer allowable even with a performance bond?

    I'm curious to hear what Rands learns from DHS.
    Nice catch on that davepa I was about to reply the same way. It appears to be a suggestion, not a requirement. I also wonder about the language " no copy of the contractis required". It makes me think if you don't have a copy of the contract, what obligation do they have to even produce the truck during PoP. You sit there going along thinking your truck is being built but no it never happens and then PoP expires and when you try to go back and say "they violated the contract", when AFG is trying to pull your money for failure to fullfill within PoP, what leg are you going to have to stand on?
    Kurt Bradley
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    Quote Originally Posted by ktb9780 View Post
    Nice catch on that davepa I was about to reply the same way. It appears to be a suggestion, not a requirement. I also wonder about the language " no copy of the contractis required". It makes me think if you don't have a copy of the contract, what obligation do they have to even produce the truck during PoP. You sit there going along thinking your truck is being built but no it never happens and then PoP expires and when you try to go back and say "they violated the contract", when AFG is trying to pull your money for failure to fullfill within PoP, what leg are you going to have to stand on?
    That was the same interpretation I had, that it was a suggestion and not a requirement. Had it been a requirement then it the wording would have been "shall" vs. "should".

    I'm thinking that the language about the contract is worded incorrectly.

    The PG states:

    As required in the two previous grant years, FY 2010 AFG vehicle awardees are required to obtain a prepayment-bond if the grantee advances funds to a manufacturer. Also, the grantee must include in their vehicle purchase contract specific performance requirements and penalties for noncompliance with the requirements. Extensions to a grant’s period of performance may not be considered if the requisite prepayment-bond is not obtained and/or if the performance penalties are not included in the purchase contract. Also, extensions to a grant’s period of performance will not be considered if the grantee is not diligent in their implementation of the grant activities.
    I'm wondering if they meant that the AFG didn't need a copy of the contract unless the awardee would request an extension of the POP.
    Last edited by onebugle; 01-05-2011 at 08:28 PM.

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    Quote Originally Posted by onebugle View Post
    I'm wondering if they meant that the AFG didn't need a copy of the contract unless the awardee would request an extension of the POP.
    That's the way I was reading it. If you have to extend your PoP, you must submit a copy of the contract showing that it's not your fault and you have all your ducks in a row as far as the agreement with the builder.

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    ok, here is the scoop. The "no-down-payment" is not required, but is strongly suggested/reccomended. The reason is that too many departments using AFG funds have been burned by companies going out of business, or delaying production for what ever reasons. This is to ensure that the AFG funds are protected, along with your funds. I was also told that as long as you have a pentily caluse and the "no-down-payment" claus in your contract, you will not need a performace bond since no money is exchanged until delivery.
    I hope that this helps everybody.

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    That was our understanding from our recent conversations with the AFG folks. They will do 25% down, but it will then require the performance bond, the cost of which will negate any discount for prepay.

    We just said we don't want to do a prepay in our bid specs.

    I would tell the vendor what your grant amount is, they should already know anyways.

    Last - we were told by a vendor in KS, who is with a department that got a grant, that FEMA had to approve our bid specs. I told him no, and he proceeded to tell me that his department has been trying for 2 years to get their AFG bid specs approved by FEMA, and that FEMA keeps saying theirs are not sufficient.

    I have never heard such before, I know it is not a requirement, but where in the world does this come from?

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    Quote Originally Posted by LVFD301 View Post
    Last - we were told by a vendor in KS, who is with a department that got a grant, that FEMA had to approve our bid specs. I told him no, and he proceeded to tell me that his department has been trying for 2 years to get their AFG bid specs approved by FEMA, and that FEMA keeps saying theirs are not sufficient.

    I have never heard such before, I know it is not a requirement, but where in the world does this come from?
    New one on me, I have never heard of that happening.
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    Quote Originally Posted by ktb9780 View Post
    New one on me, I have never heard of that happening.
    Same here--not that i even come close to operating in the Snow King's world. Could it be that they are trying to make a change from the type of truck that was originally awarded and in order to get an amendment approved they need to have the design approved??

    Just sounds goofy.

    earl ("he looked goofy." What do you mean goofy? "you know, goofy"---one of my favorite scenes from the movie...)

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    Quote Originally Posted by Greenacres2 View Post
    not that i even come close to operating in the Snow King's world.
    Oh how quickly we forget! That's "Iceman" not Snow King.LOL!
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    Frankly,
    I still have a problem the way DHS prefers 100% payment upon delivery.

    If DHS had just begun funding vehicle applications and this process was at the beginning, I would be appalled at this sort of policy. The manufacturers being expected to bleed all over the pricings with heavy discounts to get the contract are the ones who have to bear the who burden of the order. And since so many of them are custom orders, a commitment for a commitment is usually the standard. You extend an offer to bid, asking the manufacturer to come down on his pricing to be able to win the bid. Isn't it fair of the manufacturer to be aware of your commitment to the order too? Its almost like the strongest manufacturers have an edge on those who are trying to make it in this business. They are being forced out by such tactics. Orders without deposits, not even held in escrow, are hard to extend to a lending agency. Again the commitment for a commitment, but when it comes to government involvement, they are exempt.

    I still say this policy could be a part of the problem that they use as an example.

    It's just my capitalistic ways getting in the way understanding.

    Give a deposit when the order is made, and when the construction begins. I wonder if this was the same policy for the ARRA station grants?

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    Jim : I think the problem comes into play where the buyers made prepayments of 25% on signing the contract in order to get a better deal. Then the contractor has to purchase a performance bond which is extremely expensive even for the "Big Builders" to get. So the savings end up being lost and the cost of the performance bond is put onto the backend of the contract pricing , wiping out most of the savings that might have been seen with a prepayment.

    Plus the AFG program has been burned more than a few times by construction delays and companies going under while having received prepayment funds.

    When we built our previous trucks we always paid a 1/3 down payment and second 1/3 when pre-paint inspection approved and final 1/3 when delivery acceptance is signed. This helps a company maintain cashflow and pay for expensive items like fire pumps and materials.
    This was with a local builder that we had confidence in and a few years later they got in financial difficulty and the bank seized several chassis that were owned by department's and in some stage of construction process. They got burned by the company and the banks , and ended up paying additional funds to get their incomplete trucks released to them.

    Now that our town is buying trucks their legal advisors refuse a prepayment in favor of 100% payment on delivery acceptance.

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